None of the distribution approaches provides optimized outcomes for the majority of retirees. Instead, an enhanced strategy that recognizes the three phases of retirement should be adopted:
1.The go-go phase:
Early years in retirement are when people are very active. It includes much travel and acquisition — buying a new toy such as a boat, etc.
2.The slow-go phase:
Typically, in the middle years, people are settled and mellow out.
3. The no-go phase:
In this phase, the retirees could require much caregiver help, long-term nursing home care, and includes the final act of passing away.
For different reasons, phases one and three are each more expensive than phase two. Therefore, using the 4%, fixed-percentage, fixed-dollar amount, systematic withdrawal, or bucket plan methods mentioned before do not work as they do not alleviate all the risks optimally.
Based on the above design of retirement phases, a blend and customize strategy will work the best, as explained in the next blogpost.